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Bunds A Touch Firmer, ECB Executive Board Speak Eyed Tomorrow

EGBS

Bunds are +22 at 131.88, trading towards the top of today's range.

  • BTP futures underperform Bunds, currently -10 at 118.68, with the 20-day EMA at 118.46 the first support. A clear break of this level would signal scope for a deeper retracement.
  • The 10-year BTP/Bund spread has consequently drifted ~4bps wider through the day.
  • The German and French cash curves have bull steepened.
  • Both of today's syndications (EU 25-year Green and Italy 10-year BTPei) have now priced. The Italian 10-year breakeven is off intraday lows and the removal of syndication-related hedging pressure should allow that price action to hold.
  • Tomorrow's calendar is highlighted by ECB speak from Lagarde, Lane and Schnabel at "The ECB and Its Watchers XXIV" conference, while cross-border events (UK CPI and the FOMC decision) will also be of interest.

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